Sometimes relationships don’t work out. Qualcomm Inc. and Techstars are ending the Qualcomm Robotics Accelerator after only one year. The program was expected to choose 10 startups to support for each of three years.
Qualcomm CTO Matt Grob said the mobile technology company could no longer justify the accelerator’s cost. It provided a $100,000 loan, plus $20,000 from Techstars in exchange for 6 percent ownership, and mentoring to each recipient over four months. Qualcomm also provided a collaborative space for the startups near its San Diego headquarters.
Qualcomm has started laying off employees as part of a “Strategic Realignment Plan” under which it is “aggressively right-sizing” its annual spending by $1.4 billion. The company plans to reduce its global workforce of 31,300 by 4,000 people, or 15 percent, over the next year.
Over the past five years, Qualcomm grew quickly, but the smartphone market has slowed, and the company’s sales have dropped 16 percent this year.
Qualcomm is also considering splitting its patent licensing business, which is profitable, from its chip-making business.
It also suffered setbacks in the form of a $975 million fine for anticompetitive practices and when it missed out on Samsung’s chip order for the Galaxy S6 smartphone last year. Samsung decided to produce its own processors, but Qualcomm is trying to win it back as a customer.
“Members of this year’s accelerator program will continue to receive support and mentorship from Qualcomm and Techstars alike,” said Qualcomm in a statement.
“The first class was incredibly successful, and Techstars will continue to support these 10 portfolio companies as we support all Techstars companies post-program,” said David Brown, managing partner at Techstars in Boulder, Colo.
However, the graduates of the Qualcomm Robotics Accelerator have raised a total of only about $1.8 million beyond their initial loans, “among the five lowest funding outcomes of the 61 programs that Techstars has managed since 2007,” according to Xconomy San Diego.
As discussed during the Pitchfire contest at this year’s RoboBusiness conference, part of the challenge beyond raising money is making sure that robotics products are commercially viable and that a startup has a solid marketing plan.
Going their separate ways
Qualcomm is looking for another way to find and nurture startups as part of its mobile processor ecosystem, without Techstars.
“After careful consideration, Qualcomm has determined that the best course of action for the company, our shareholders, and our customers is to not move forward with Techstars while we look into future robotics initiatives,” Qualcomm said.
Among the supporting partners of the accelerator was eInfochips Ltd., which provided its Eragon development kit, system-on-module, and design services to the 10 participants. The Sunnyvale, Calif.-based company’s software also uses Qualcomm’s Snapdragon processors.
In the meantime, Techstars teamed up with the Disney Accelerator and supported 10 other startups with $120,000 each, including Imperson, which is working on virtual replicas of pop stars. Another recipient was U.K.-based Open Bionics Ltd., which is using 3D printing to create more affordable prosthetic hands.
San Diego hopes to weather job losses
Robotics investors and companies such as accelerator alumnus CleverPet also want San Diego to stay competitive with Silicon Valley, but it won’t be easy, said industry experts.
Investment activity is still occurring in the area. The San Diego Venture Group named NXT Robotics as one of 31 “Cool Companies” from more than 160 applicants. NXT Robotics‘ IRIS service robot uses Snapdragon and combines 3D-printed hardware and collaborative software intended to take advantage of Internet of Things (IoT) developments.
Qualcomm plans to lay off 1,317 employees locally, which will lead to an increase in unleased commercial real estate in San Diego. Some critics have noted that it is among the tech companies laying off U.S. workers but asking for more H-1B temporary visas.
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Qualcomm has replied that it is supporting STEM (science, technology, engineering, and math) training in an effort to remedy the technical skills shortage.
Although the telecommunications and semiconductor job markets have also slowed, said The San Diego Union-Tribune, there are efforts to take advantage of Qualcomm’s layoffs.
“This is pretty much world-class talent when it comes out of Qualcomm,” said Mark Cafferty, CEO of the San Diego Regional Economic Development Corp., which is trying to help former employees find jobs at local companies.